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ICPA
can make representations about the nature of guaranteed price
contracts to the general public, media and government only to the
extent those representations are true and reflect general industry
practices. Over the last three years ICPA has distributed, through its
members, just over 200,000 of its "It's A Promise"
bill stuffers that drive home the message to consumers that once the
consumer has Today's edition of the Hartford Courant also carries a story featuring a discussion of this issue, where retailers are in serving consumers with these contracts, and how some consumers regret their earlier decisions. See > http://www.courant.com/business/hc-heating1020.artoct20,0,1326886.story Consumers have been asking to revisit their spring and early summer contract decisions since early August, given the dramatic decline in world commodity markets and prices that have fallen by about $2 a gallon there and downstream. This took on addition impetus on October 8th with a comment made by the Attorney General in an interview with Channel 12 television in Norwalk that indicated that contracts might be able to be renegotiated. ICPA Executive Director Gene Guilford also made an appearance on Channel 12 on October 10th to broaden the discussion and clarify the position local retailers were in.
Heating oil retailers design their own programs, write their own contracts and make their own decisions about what program[s] to offer and how they choose to offer them. It is also up to retailers to decide how and under what circumstances they choose to defend their own agreements. In an appearance with Channel 3 television's Al Terzi on his "3 on Your Side" consumer program, ICPA's Guilford answered a question from a consumer who purchased a $4.69 lock-in during June and now had questions.
...every
prediction - thus far - is wrong by almost 1/2. which is why we shy
away from making predictions in these times. No doubt the consumer who
called Channel 3 listened to the news, read the papers and watched tv
and heard all manner of officials sounding the alarm about the
"heat or eat" issues of life and death many of these
articles talk about and who wouldn't be afraid? It's not that they're
bad - just got it wrong, which is easy to do in an extremely volatile
market over which we have absolutely no control.
Consumers
who buy lock-in contracts are doing just that - locking in their price
for later delivery at an agreed on price and those contracts are a
guarantee of what the consumer will pay - NOT a guarantee that the
price will be less than the market price at the time of delivery.
Under CT law retailers cannot offer these guaranteed price contracts
unless they have bought at least 80% of the oil from their supplier,
again by contract. The retailer, having paid likely over $4 a gallon a
few months ago and resold it for $4.69 doesn't get a lower price from
his supplier - which is why the consumer's price doesn't change
either. Some ICPA members sent letters to their customers offering to renegotiate their contracts, others did so without specific offers but on customer requests. One wholesaler has already sent a communication to its retailer customers offering to restructure wholesale deals. No one likes a moving target but everyone tries to cope as best they can and they each make their own decisions about how to best do that. ICPA can only do it's best communicating to the public, media and government what is going on in a system that changes almost daily. For more information contact Gene at gene@icpa.org or call ICPA toll free at 1-866-521-ICPA
For more information contact Gene at gene@icpa.org or Chris at chris@icpa.org or call ICPA toll free at 1-866-521-ICPA
GAO RELEASES STUDY ON AUTOMATIC TEMPERATURE COMPENSATION FOR MOTOR FUELS This week the Government Accountability Office (GAO) released its study on automatic temperature compensation (ATC) at the retail level. The GAO compiled information for the report from the National Conference on Weights and Measures (NCWM), the National Institute of Standards and Technology (NIST), consumer advocacy groups, and from industry representatives. GAO also contacted officials from the California Energy Commission, which is conducting a cost/benefit analysis of ATC implementation, and officials from Australia, Belgium, Canada, and the United Kingdom. PMAA continues to argue that with the majority of retail gasoline stations owned by small independent businesses, implementing ATC would not benefit the consumer and would be another cost that small business owners would have to bear in a market where credit is scarce. Although industry representatives argued that the costs associated with ATC implementation would be passed on to consumers, GAO reported that the costs to implement ATC are unclear. For a copy of the report, please click here. [PMAA] SENATE AGRICULTURE CHAIR READY TO GIVE THE CFTC OVERSIGHT OVER COMMODITY SWAPS This
week, Senate Agriculture Committee Chairman Tom Harkin (D-IA) held a
hearing to discuss the unregulated financial derivatives market that
led to the demise of AIG and other financial institutions. Harkin said
after the hearing that he was leaning toward drafting a bill that
would give the Commodity Futures Trading Commission (CFTC) authority
to regulate commodity swaps and other financial instruments which he
argued, “must be traded on a regulated exchange.” He later added
Congress made “a terrible mistake” in regards of the Commodity
Futures Modernization Act of 2000 which exempted swaps and other
financial derivatives from federal oversight. More importantly during
the hearing, Chicago Mercantile Exchange Group Chairman Terrence Duffy
said that swaps should be traded on regulated exchanges to further
provide better price transparency. House Agriculture Committee
Chairman Collin Peterson (D-MN) also held a hearing today on the same
topic. ICPA REPORT ON CONNECTICUT ELECTION POLLS With the election a mere 15 days away, the polls are showing some trends here in Connecticut and across the country. As of the 14th of October, Senator Obama leads Senator McCain by 19 points in the Presidential election in Connecticut. In the Connecticut 4th CD, former Goldman Sachs Vice President and Democrat Jim Himes leads incumbent Republican Christopher Shays 48% to 45%. In the Connecticut 5th CD, Incumbent Chris Murphy leads State Senator David Cappiello 52% to 48%. In the Connecticut 2nd CD, Incumbent Joe Courtney leads former sub base commander Sean Sullivan by 55% to 27%. Congressman John Larson in the 1st CD and Congresswoman Rosa DeLauro in the 3rd CD have wide leads in their respective polls. Nationally, the U.S. House of Representatives currently is 235 Democrat, 199 Republican and 1 vacancy. At this writing, Democrats could pick up as many as 25 seats, leaving a 260 Democrat - 175 Republican split. On the U.S. Senate side that is currently 49 Republicans - 49 Democrats and 2 Independents, with 35 seats up for election in 2008. At this writing, Democrats could pick up as many as 6 seats, with Republicans John Sununu in NH and Gordon Smith in OR likely to lose to their Democrat challengers and even Elizabeth Dole in North Carolina finds herself in a very tough race for re-election. Senator Norm Coleman of MN is running for his political life from Democrat challenger comedian Al Franken. With Senator Obama widening his national electoral lead over McCain, and Democrats appearing to be set to make solid gains in both Houses of Congress, this isn't the year to be a Republican running to serve in Washington. For more information contact Gene at gene@icpa.org or call ICPA toll free at 1-866-521-ICPA
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bought a contract - the consumer owns it. The fact that
a local heating oil retailer had to lock in prices with his or her supplier that can't be changed, so renegotiating a deal made three months ago
- is not the simple request anyone may make it out to be.
Based
on what anyone knew through July, the $4.69 price the consumer called
about was a very fair price as her dealer had to BUY the oil he sold
to this consumer under CT's prebuy law [or at least 80% of the volume
he sold], so her retailer bought the oil at prices that were higher
then than they are today, and then sold it to her. The retailer's
wholesaler will not change the price of a contract [42,000 gals] of
heating oil that retail company bought months ago when wholesale
prices were higher than they are today and typically wholesalers DO
NOT let retailers renegotiate their supply agreements, which is
typically why retailers cannot do the same for their customers..
The
CITGO/Citizens Energy program will return for the 2008/2009
heating season. Details on the program will be released by
Citizens Energy in Boston soon.
